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Taxes & Duties

Dividend Withholding Tax - General Information Leaflet (INFO 1 V4)

1. What is Dividend Withholding Tax?

In general, dividends paid and other distributions made by Irish resident companies are liable to a dividend withholding tax (DWT) at the standard rate.

2. How does DWT operate?

DWT will apply to all 'relevant distributions' except:-

  1. dividends paid to Ministers of the Government in their capacity as such Ministers,
  2. distributions made by an Irish resident subsidiary company to its parent in another EU Member State where withholding tax is prohibited under EU legislation,
  3. distributions made out of exempted profits within the meaning of section 140 of the Taxes Consolidation Act, 1997,
  4. distributions made out of disregarded income within the meaning of section 141 of the Taxes Consolidation Act, 1997, to which subsection 3(a) of that section applies,
  5. distributions made out of exempted income within the meaning of section 142 of the Taxes Consolidation Act, 1997,
  6. distributions made by an Irish-resident company to another Irish-resident company of which it is a 51 per cent subsidiary within the meaning of section 9 of the Taxes Consolidation Act, 1997.

For DWT purposes the term 'relevant distribution' includes all payments normally treated as a distribution for income tax and corporation tax purposes. It includes:-

  1. normal cash dividends and non-cash dividends;
  2. expenses incurred by close companies in providing benefits or facilities for a participator in the company;
  3. excess interest paid by close companies to directors;
  4. scrip dividends of quoted companies, i.e. additional share capital of a quoted company taken in lieu of a cash distribution;
  5. scrip dividends of unquoted companies.

Special provisions apply in the case of scrip dividends, whether of a quoted or unquoted company, and in the case of other non-cash distributions made by companies.

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3. Is DWT deducted in all cases?

No. The law provides for exemption from DWT for relevant distributions in certain circumstances. This exemption effectively means that the distribution will be paid gross (i.e. without deduction of DWT) to dividend recipients.

4. Which Irish-resident recipients are entitled to exemptions from DWT?

  1. companies;
  2. pension schemes;
  3. qualifying employee share ownership trusts (ESOTs);
  4. collective investment undertakings (CIUs);
  5. charities;
  6. bodies established and existing for the sole purpose of promoting athletic or amateur games or sports;
  7. designated brokers in relation to Special Portfolio Investment Accounts (SPIAs);
  8. qualifying fund managers in relation to Approved Retirement Funds (ARFs) or Approved Minimum Retirement Funds (AMRFs)
  9. persons entitled to exemption from income tax under Schedule F, by virtue of the following:-
    1. section 189(2) of the Taxes Consolidation Act, 1997 – permanently incapacitated individuals exempt from income tax in respect of income arising from the investment of compensation payments made by the courts, or under out of court settlements, in respect of personal injury claims;
    2. section 189A(2) of the Taxes Consolidation Act, 1997 – the trustees of qualifying trusts, the funds of which trusts were raised by public subscriptions on behalf of individuals who are permanently incapacitated from maintaining themselves, and the income arising to such trusts from the investment of trust funds is exempt from income tax;
    3. section 189A(3)(b) of the Taxes Consolidation Act, 1997 – permanently incapacitated individuals exempt from income tax in respect of payments received from qualifying trusts (as at 2) above) and in respect of income arising from the investment of such payments;
    4. section 192(2) of the Taxes Consolidation Act, 1997 – thalidomide victims exempt from income tax in respect of income arising from the investment of compensation payments made by the Minister for Health and Children or the Thalidomide Victims Foundation.

These recipients are generally known as excluded persons. It should be noted that, other than the permanently incapacitated individuals outlined above, individuals resident in Ireland for tax purposes cannot be exempted from DWT.

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5. Which non-resident recipients are entitled to exemptions from DWT?

  1. persons, other than companies, who are neither resident nor ordinarily resident in the State and who are resident for tax purposes in an EU Member State other than Ireland or in a country with which Ireland has a Double Taxation Agreement (relevant territories). These persons can include non-resident superannuation funds and non-resident charities;
  2. companies which are resident in a relevant territory, but which are not under the control, whether directly or indirectly, of a person or persons who is/are resident in Ireland;
  3. companies which are not resident in the State and which are ultimately controlled by persons who are resident for tax purposes in a relevant territory;
  4. companies which are not resident in the State, the principal class of shares of which, or
    • of another company of which it is a 75 per cent subsidiary, or
    • where the company is wholly owned by 2 or more companies, of each of those companies, is substantially and regularly traded on a recognised stock exchange in a relevant territory, or on such other stock exchange as may be approved of by the Minister for Finance for the purposes of the DWT scheme.

These recipients are generally known as qualifying non-resident persons.

6. How do I find out the countries with which Ireland has Double Taxation Agreements?

You can contact
DWT Unit, Collector General’s Division,
Government Offices,
Nenagh,
Co. Tipperary.
(tel. +353-67-63400/fax. +353-67-33822/e-mail. infodwt@revenue.ie.

Alternatively, you can check the Tax Treaties page on the Revenue website.

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7. How do I obtain an exemption from DWT?

You must make a declaration of your entitlement to exemption. The declaration must be made on one of a number of standardised declaration forms, authorised by the Revenue Commissioners. The declaration can be made directly to the company making the distribution, or via a qualifying intermediary or authorised withholding agent (see 8 & 9 below).

If you are an excluded person, the declaration remains valid until you cease to be an excluded person for the purposes of DWT.

If you are a qualifying non-resident person, other than a company, your declaration form must be certified by the tax authority of the country in which you are resident for tax purposes.

A declaration made by a non-resident company must be certified by an authorised signatory to the effect that: -

  1. the company is not controlled by persons resident in Ireland (in this case, it will also be necessary for the company to obtain certification from the tax authority in the country in which it is resident for tax purposes);
  2. the company is ultimately controlled by residents of a relevant territory, or
  3. the principal class of the company’s shares, or shares of another company of which the company is a 75 per cent subsidiary, or where the company is wholly owned by 2 or more companies, of each of those companies, is substantially and regularly traded on one or more recognised stock exchange in a relevant territory or territories or on such other stock exchange as may be approved of by the Minister for Finance for the purposes of the DWT scheme.

The three types of certificate referred to above are to be effective only for the period from the date of issue until 31 December in the fifth year following the year in which the certificate was issued. Consequently, if you wish to maintain the exemption from DWT, the certificates will have to be renewed at the end of such period.

In addition, in the case of a non-resident trust, the declaration form must be accompanied by a certificate from the trustee or trustees of the trust, showing the names and addresses of:-

  1. any person who has provided or undertaken to provide assets or income directly or indirectly for the purposes of the trusts (these persons are known as settlors);
  2. any beneficiary or beneficiaries in relation to the trust.

The declarations must also be accompanied by a certificate from the Revenue Commissioners, certifying that they have noted the information provided by the trustees.

Investors in an Irish company through an American depositary bank, by way of investment instruments known as American Depositary Receipts (ADRs), can avail of a simplified procedure to allow for the receipt of dividend income without the deduction of DWT. The American depositary bank will be allowed to receive and pass on the dividend from the Irish company gross :-

  1. where the recipient is the direct beneficial owner of the shares, and;
  2. where the ADR register of the depositary bank shows that the recipient's address is in the US (there is no need to provide a certificate of US tax residence), and;
  3. if there is a further intermediary between the depositary bank and the recipient, where the depositary bank receives confirmation from the intermediary that the recipient’s address in the register of the intermediary is a US address (again, there is no need to provide a certificate of US tax residence).

8. What is a qualifying intermediary?

A qualifying intermediary (QI) is a person (e.g. a nominee or a custodian) whose trade consists of or includes the receipt of distributions on behalf of other persons. The DWT scheme provides for the common situation where distributions are made through intermediaries.

In order to operate the DWT scheme, a qualifying intermediary must be authorised by the Revenue Commissioners, and this authorisation can be revoked by the Commissioners if certain conditions set out in legislation are not complied with by the qualifying intermediary. The Revenue Commissioners are obliged to maintain a list of all currently-authorised qualifying intermediaries. Anyone wishing to find out whether the intermediary they use or intend to use is authorised by the Revenue Commissioners, should contact DWT Section at the address and numbers listed above. This information is also available on the List of Authorised Qualifying Intermediaries and Authorised Withholding Agents.

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9. What is an Authorised Withholding Agent?

An Authorised Withholding Agent (AWA) is a particular form of intermediary for the purposes of the DWT Scheme. The main difference between an AWA and a QI is that distributions can be made by companies to an AWA without the deduction of DWT. The AWA then has the responsibility and power to deduct DWT from the distribution and pay it over to Revenue. A QI does not have this power.

In order to operate the DWT scheme, an AWA must be authorised by the Revenue Commissioners, and this authorisation can be revoked by the Commissioners if certain conditions set out in legislation are not complied with by the AWA. The Revenue Commissioners are obliged to maintain a list of all currently-authorised AWAs. If you wish to find out whether the intermediary you use or intend to use is authorised by the Revenue Commissioners, you may contact DWT Section at the address and numbers listed above. This information is also available on the List of Authorised Qualifying Intermediaries and Authorised Withholding Agents.

10. How do I know if DWT has been deducted from my distribution?

Every company which makes, and every AWA which is treated as making, relevant distributions must give each recipient a statement in writing showing:-

  • the name and address of the company making the distribution;
  • if an authorised withholding agent is involved, the name and address of that agent;
  • the name and address of the person to whom the distribution is made;
  • the date the distribution is made;
  • the amount of the distribution, and
  • the amount of the DWT (if any) deducted from the distribution.

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11. DWT has been deducted from me. What happens now?

  • If you are resident in Ireland and are liable to income tax, you may claim to have the DWT set off against your liability and, if the DWT exceeds that liability, to have the excess refunded.
  • If you are resident in Ireland but are not liable to income tax, a claim may be made for a refund of the DWT deducted.
  • If you are either an excluded person or a qualifying non-resident person, having made the necessary declarations and DWT has been deducted from you, you may claim a refund of DWT. In addition if you are resident in a relevant territory but have not made, or cannot make, a declaration, you may also obtain a refund of DWT if you can provide proof of your tax residence status in a relevant territory.

Claims for offsets/refunds from individual residents of Ireland may be made by contacting the relevant Tax Inspector. In the case of companies, where DWT has been deducted because exemption declarations have not been put in place, please contact DWT Unit at the address and number listed above.

Claims in respect of Irish resident charities should be made to:

Charity Claims Unit,
Collector General’s Division,,
Government Offices,
Nenagh,
Co. Tipperary.

Tel. +353-67-63400
Fax. +353-67-32916
e-mail. charityclaims@revenue.ie

Claims in respect of pension schemes resident in Ireland should be made to:

Large Cases Division,
Customer Service Unit,
Ballaugh House,
73-79 Mount St. Lower,
Dublin 2.

Tel. +353-1-6470710
Fax. +353-1-6716668
e-mail. LCDCustomerServicesGroup@revenue.ie

All Claims must be supported by the statement in writing mentioned at 10 above, together with such other evidence as Revenue considers necessary to establish entitlement to the refund or set-off of DWT.

12. Where can I get further information on DWT?

Please contact DWT Unit at the address and numbers listed above.

DWT Unit,
Office of the Revenue Commissioners

May 2011


Disclaimer

This leaflet is intended to describe, in general terms, Dividend Withholding Tax. As such, it does not attempt to cover every issue which may arise in relation to the tax. It does not purport to be a legal interpretation of the statutory provisions and consequently, responsibility cannot be accepted for any liability incurred or loss suffered as a result of relying on any matter published herein.

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